5 steps to unlocking value from procurement automation technology
Cost reduction has always been the name of the game for CPOs, as they seek out ways to better manage and optimize their goods and services. But CPOs have a newfound urgency for cutting costs: looming concern over the state of our global economy.
The economic downturn and deflation is the top risk to organizations, according to survey respondents in the Deloitte Global CPO Survey, with seven in 10 planning to cut costs.
But it’s not just external forces that causes concern for CPOs. The Deloitte survey found that the second biggest risk is internal complexities, brought on in part by nonstandard processes. And it’s no surprise, given that procurement teams must communicate with thousands of suppliers, input and collect data from multiple systems, and interact with many different internal departments, each of which have their own set of processes and preferences.
Unlocking value with procurement automation technology
How can your procurement team add more value to your organization amidst these economic pressures and within your own challenging environments? According to the Deloitte survey, the top three initiatives cited by CPOs were consolidating spend (36%), supplier collaboration (28%), and business partnering (27%).
Procurement automation technology can help your team take on the procurement strategies identified by CPOs as those that will have the biggest impact on your success. Here’s how.
More strategic spend decisions start with a foundation of clean, complete data sets from across your entire procurement technology stack. Yet this isn’t often the data reality in today’s organizations. Typical procurement processes have created an environment where data is stored in multiple locations, shared in differing formats, and often missing or containing outdated information.
Procurement automation technology can transform the way you manage your master supplier data to get you to a path of optimization. How? By taking unstructured data, integrating it with your systems of record, and automatically collaborating with suppliers and internal stakeholders to validate it. The result is a data set that is clean, consolidated, and useful to your team, who can then carry out meaningful spend analysis.
Improve supplier collaboration
Great collaborators are great communicators. But for organizations with thousands of suppliers each with their own set of processes, developing effective ways to communicate is a challenge. Procurement automation technology can significantly streamline and improve the way procurement teams communicate and collect information across the entire supply chain. Here are two examples of how Catalytic helps procurement teams.
- Catalytic can generate standard contracts by pulling supplier onboarding information into existing templates and send for review and electronic signature, by integrating with tools like HelloSign.
- With Catalytic, you can automatically ask suppliers on a recurring basis to upload specific certifications or insurance documentation, as well as generate on-demand or scheduled reports of supplier compliance levels.
Most procurement organizations are burdened by insufficient headcount and resources to manage their daily tasks, much less have time to develop strategic relationships throughout the business. Procurement automation technology can reduce the amount of tedious and transactional work done by procurement, like processing payments, creating receipts and invoices, collecting e-signatures, updating spreadsheets, and sending reminders when tasks aren’t completed.
In times of digital transformation and rapid business innovation, it’s especially important to secure a seat at the decision-making table. Once there, you can get a better sense of the business needs, partner with departmental stakeholders to optimize existing vendor partnerships, and create a proactive, forward-looking plan to maximize investments.
5 steps to implementing procurement automation technology
The biggest reason automation initiatives fail is because they can’t be scaled across the business. Here are 5 steps to success.
1. Build a business case.
Successful projects begin with a deep understanding of what specific problems you’re trying to solve, and how they’re impacting your business. Spend time examining your existing procurement processes to identify where they’re falling short on delivering value back to your organization.
When possible, quantify the risks and missed opportunities. They could be financial risks associated with missed payments, exposure to compliance concerns when supplier certifications aren’t properly tracked, or efficiency costs incurred by manual work.
Also, don’t forget about the employee and customer experience risks. Are you utilizing your employees in valuable ways for both your company and their careers? Are they spending time on tactical, mundane work or on value-added, strategic initiatives? How do your processes contribute to or take away from your customer experience?
2. Secure stakeholder support.
Finding an executive who will champion your initiative can mean the difference between success and failure. Automation is a journey. You’ll need their support to help you drive momentum, advocate on your behalf, and help you tackle any roadblocks along the way.
Use the research and data collected while preparing your business case to help your key stakeholders understand the urgency of procurement automation. Each department in your organization interacts with procurement, so a major change in processes should be thoughtfully communicated. Clearly convey the benefits that automation can bring and exactly how it will improve both employee and customer experiences across the board.
3. Align your automation initiatives with business goals.
Successful automation projects are tied directly to specific business goals. When determining which processes are best for automation, start first with those that can have the biggest impact on your company objectives. Early on, this will be key to building credibility with stakeholders. And, those early wins can be used to market your automation initiative and build excitement.
As you continue to automate, keep that alignment as a key focus of your expansion strategy. Remember, not every process should be automated. Once you begin automating for automation’s sake, you’ll de-value your efforts and lose momentum and stakeholder support.
4. Build employee engagement and support.
The word automation can still make some employees nervous that you’re effectively trying to put them out of a job. That fear shouldn’t be ignored. You’ll need your entire procurement team on board to be successful, from understanding their pain points with your current processes to helping you refine your automations over time.
Focus on what’s in it for your employees. With procurement automation technology, they’ll have the time and opportunity to do more strategic work that will be more meaningful to their careers. And continue to keep a pulse on your employee sentiment as you progress through your automation journey. Tracking the improvement of your employee experience will help as your company scales automation down the line.
5. Establish a Center of Excellence (COE) to achieve scale.
For your entire company to truly unlock your potential with automation, you must be able to scale it organization-wide. To best achieve this, early automation adopters have established internal COEs made up of various stakeholders within different departments. The COE establishes a governance model and operating procedures, and owns and drives all automation initiatives.
A successful COE has an experienced, passionate leader who can help the team stay true to the vision and objectives, yet adapt and flex your automation strategy to the company’s needs as you scale. There’s nothing static about a business today, and a COE can help ensure you stay on course while managing through your business changes.
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